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Environment and Planning A 1994, volume 26, pages 5 4 3 - 5 6 6

The 'developmental state' and the newly industrialised economies of Asia

M Douglass Department of Urban and Regional Planning, University of Hawaii, 2424 Maile Way, Honolulu, HI 96822, USA Received 24 June 1993

Abstract. The renewed interest in the role of the state in economic growth and development has been focused on the four newly industrialised economies (NIEs) of Asia—Hong Kong, Korea, Singapore, and Taiwan. Much of the recent literature tends to crowd these states into an undif- ferentiated model of the 'developmental state'. A closer examination reveals significant differences among them in terms of the state's relations to capital, labour, and the external economy that not only defy reduction to a single model but also show that options for moving away from labour- intensive segments of production for world markets vary considerably. Furthermore, as demo- cratisation movements gain voice, and as the transnationalisation of capital from within these economies proceeds, the high degree of autonomy associated with the developmental state is eroding, and its authoritarian uses of power are increasingly being challenged.

1 Introduction The 1980s brought a paradox to the study of national economic development: as the rise of neoconservative governments initiated a worldwide trend toward the withdrawal of the state from the many regulatory and management roles it had played in previous decades, the importance of an interventionist state in achieving and sustaining high levels of economic growth was being rediscovered by political scientists and political economists. This rediscovery covered an impressive array of centrist and leftist ideological positions, ranging from 'neostatist' political scientists (Caporaso, 1988; Poggi, 1990), to those studying the 'social structure of accumula- tion' (Hirst and Zeitlin, 1991; Kotz, 1990) and to 'regulation' theorists (Aglietta, 1979; Dunford, 1990; Lipietz, 1986; Moulaert and Swyngedouw, 1989). For many of these theorists, the erosion of the state's role in the economy has been a critical factor in a host of contemporary national economic crises (Lash and Urry, 1987; Lipietz, 1987).

For those on the right, the dismantling of the interventionist state is seen as a necessary condition for a new era of heightened economic efficiency and develop- ment around the world. State involvement is viewed to be in fundamental opposition to efficient economic growth, and, by extension, state activities are assumed to be politically driven rather than economic in nature (Davis and Ward, 1990), The agenda for action along these lines, which has been pushed forward in Africa, Asia, and Latin America through powerful international lending agencies and under the guise of debt restructuring, has provided the dominant vocabulary—deregulation and privatisation—for national economic planning in the world today. Countries that 'could not get the prices right' and rid themselves of rent-seeking holders of state offices would be doomed to a slow economic growth, if not a reversal of economic fortunes. An attendant dimension of this line is the exhortation for national economies to open more fully to international economic forces in their push toward export-oriented industrialisation and linkups with transnational capital.

Given these competing understandings and visions of the role of the state, it is not surprising that the debate has turned to the analysis of the export-oriented

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manufacturing 'miracle' economies of the Third World, particularly the four Asian newly industrialised economies (NIEs)—Hong Kong, Korea(1), Singapore, and Taiwan. The initial question of the debate was whether these states were essentially noninterventionist guardians of laissez-faire economies, or, on the contrary, were strongly interventionist 'developmental' states (White, 1988). Although the neoclas- sical economic construction of these economies as market-driven successes of capitalist development prevailed up to the early 1980s, by the end of the 1980s evidence contradicting this view was overwhelming. The new view was that these states were not just moderately involved, but were instead extreme cases of state intervention and manipulation of economy and society alike.

Moving from one debate merely serves to encounter another. Accepting the strong role that the state has played in economic development, one must ask whether there are different types of such states and, therefore, whether there are also different development pathways toward high levels of per capita GDPs. Much of the more general literature on the Asian NIEs has grouped them into a single type, with appellations ranging from 'authoritarianism' to 'command capitalism' (Bello and Rosenfeld, 1990), 'state capitalism' (Peet, 1991), 'corporatism' (Pye, 1990), and 'developmental states' (Hsiao, 1990). At stake at this level of the debate are not only the economics of development but also, equally important, the issues of political reform and relations between state and civil society, for, taken to its extreme, the conclusion that East Asian industrialisation and economic growth required an unusual chemistry of high state autonomy to create extremely authori- tarian regimes presents a disturbing message for the rest of the developing world: do would-be newly industrialising countries need to construct a near-version of this 'model' to succeed? To the extent that contemporary international and internal conditions facing these countries are such that they could not do so, the question may be moot. But, given the rhetoric of many of the key architects and former leaders of governments in the Asian NIEs who assert that a strong, nondemocratic state is needed for economic development, the question is still on the table.

My purpose in this paper is, first, to explore the idea that a model of the devel- opmental state can be derived from the Asian NIE experiences. In showing that variations among the Asian NIEs are too great to allow for such a modeling exercise, I further seek a more dynamic understanding of state transformations to account for changes both in the international economy and in internal social rela- tions. In contrast to either neoclassical economic or mainstream Marxist models which assert a linear path of transformation and development for all countries, the emphasis given here to international-local contingency has quite different implica- tions for my assessment of the current crises facing the Asian NIEs. Among the most important is the conclusion that in the coming years the Asian NIEs are likely to become more divergent in terms of their respective modes of integration into the international economy and in terms of the types of transformations in political regimes and relations between state and civil society.

2 The 'developmental state' As previously noted, there is by now little basis for the notion that the Asian NIE states were only moderately involved in the successes of their economies. The state played a strategic role in harnessing national and international forces to orchestrate a 'late development' process of accelerated industrialisation aimed at catching up with Europe, the USA, and Japan. This point has received an overwhelming

W In this discussion Korea refers to South Korea.

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amount of support and is by now incontrovertible (Amsden, 1989; Bello and Rosenfeld, 1990; Davis and Ward, 1990; Deyo, 1989; Gereffi, 1990; Johnson, 1988; Levy, 1991; Rodan, 1989; Wade, 1993; Woo, 1991).<2>

Given the impressive economic performance of the Asian NIEs in terms of rising per capita GDP, the neoclassical economic expectations that such strongly interventionist states would find themselves overseeing inefficient, noncompetitive economies is also contradicted by their experience. Their regimes not only helped to generate the highest sustained rates of economic growth in modern world history, but, at least in the cases of Korea and Taiwan, did so against rising internal pres- sures (Wade, 1993). In doing so, their interventions also cast doubt on earlier Marxian theories that the state has no autonomy from capital (Miliband, 1977) and, in the case of 'peripheral' social formations, is essentially dependent on the world system dominated by transnational capital and core metropolitan states (Berberoglu, 1992; Cotton, 1992; Cumings, 1989; Wallerstein, 1979). Their successes thus called for new thinking about the state on both the right and the left.

One outcome of this renewed thinking has been the discovery of the 'develop- mental state', an idea that literature on the Asian NIEs has placed in currency over the past decade. The central theme of this literature is that these states are different from other Third World states, almost all of which are, by implication, less develop- mental. This theme covers at least three major aspects of the nature and role of the state in Asian NIEs: (1) the state has enjoyed an unusually high degree of autonomy necessary for its positive role in economic development, and, further, this autonomy is derived from historical features and conditions common to the Asian NIEs, but which are rare elsewhere; (2) the state has effectively used this autonomy to orchestrate the economic growth process and has been able to avoid the debilitating rent-seeking and other nondevelopmental state-economy relations typically found in other developing countries; and (3) although the Asian NIEs may not constitute a replicable model of development, other states can learn certain lessons from their common experiences. Each of these dimensions is discussed in turn below.

2.1 State autonomy The question of autonomy strikes at the centre of most theories of the state. Although there is by no means a consensus on this question, particularly with regard to the conceptualisation of the nature of society and the political driving forces surrounding the state, a wide band of theory posits that the state enjoys relative autonomy from class and other social relations.(3) In the case of the Asian NIEs, the proposition put forth by a number of analysts is that the state has enjoyed an exceptional, if not close to absolute, degree of autonomy from all sectors of society, including (nongovernment) elites, lingering 'feudal elements', and other classes, particularly the emerging urban proletariat.

<2> The positions of most of the authors cited here are consistent with Wade's (1988, page 151) conclusion that "I can find little empirical support for the proposition that the sectoral industrial strategies of the East Asian [economies] amounted to mere 'hand-waving', or that their overall economic performance would have been superior if they had had a more neutral policy regime". <3) Whether derived from Weberian views that politics, and therefore the state, cannot be subsumed under economic or class relations (Saunders, 1986; Weber, 1968), or distilled from Marxian structuralist (Poulantzas, 1973) or poststructuralist formulations (Aglietta, 1979; Lipietz, 1987) that the state must regulate society in a manner which may work against the specific interests of fractions of capital to sustain capitalist development, the state is seen as having some degree of independence from elites and other powerful interest groups. The 'steering problem' assigned to the state by Habermas (1976) also asserts some degree of state autonomy.

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Many of the attributes of autonomy associated with the Asian NIE states are not unique to them. That each was nondemocratic, that is, functioned as a de facto single-party state, regularly resorted to martial law for extended periods, or had only token political participation, is the stuff of states throughout most of the world. The more revealing insights differentiating the Asian NIEs from other states come not from a rehearsal of these features, but rather from discussion on their sources and, by extension, the ways in which the state was able to exercise the power it assumed.

Concerning the sources of state autonomy, at least four factors are often pointed to as being common to all of the Asian NIEs. One is the absence of powerful rural- based landed interests that have been identified as obstacles to export-oriented strategies in the industrialising countries of Latin America. Often referred to as remnant 'precapitalist' or 'feudal' classes, such elites did not exist in either Hong Kong or Singapore, and in Korea and Taiwan they were largely eliminated by thorough agrarian land reform in the 1950s, which also had the effect of making new petty rural landholders supportive of the regimes in power (Douglass, 1983; Haggard, 1988).

A second factor is that, at least in the initial period of industrial expansion, the capitalist class was very small, weak, and easily leveraged by the state. In the case of Singapore, government strategies have kept indigenous capitalist enterprises at a minimum to the present day. In Hong Kong and Taiwan, these enterprises have for the most part remained very small in scale, often family based. In Korea, the small size of urban and industrial capital classes in the 1960s allowed the state boldly to carry out such steps as nationalisation of the banking system, giving it great leverage over the then small chaebol-dominated industrial sector (Bello and Rosenfeld, 1990). In sum, social forces opposed to urban-industrial development linked to the world economy were either nonexistent, eliminated, or more easily controlled than in other Asian countries.

A third source of state autonomy is the special historical mission the regimes have used to justify concentrations of power and nondemocratic practices. All the states portrayed themselves as beacons of capitalism that had to succeed if communist or socialist forces were to be kept at bay. In the cases of Korea and Taiwan, this ideology was most obvious and straightforwardly pursued to legitimate the state's intervention in a wide array of activities, including overt suppression of labour and civil society. Long confrontation with North Korea and China, respec- tively, also dampened factionalism among elites.(4) Hong Kong, a colony with little chance of local self-determination, was also put forth as a champion of free-market development. The Singapore state, in a perhaps slightly less obvious way, moved to counter the communist labour parties that had historically been associated with overseas Chinese in its neighbouring countries of Malaysia and Indonesia. At the same time, the government had doggedly asserted that Asian people do not want Western democracy but instead prefer 'commutarian' values and, by extension, paternalistic government leadership that closely controls information media and political association outside of the state.

In other words, more than in most developing countries, the state was able to use effectively the mission of capitalist development in an historical struggle against communist totalitarianism to aggrandise its own autonomy. This had a cumulative effect: the more these states were successful in delivering high standards of material (4) Unlike the experience in Taiwan with the more encompassing organisation of the Kuomintang the absence of a mass base for the ruling party fostered an exceptionally narrow path of access to state power in Korea (Park M, 1987).

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welfare, the more they were able to argue against giving greater access to the state and to use its police power to suppress any and all forms of antiregime activity.(5)

A fourth reason often cited is culture, namely the commonality of neo- Confucianism (or post-Confucianism) shared by the Asian NIEs (O'Malley, 1988). Although not quite an inversion of Weber's famous study on why capitalism arose in Protestant Christian cultures and not in China's Confucianist society, this explana- tion represents an important interpretation of it, namely, that, although such societies may not have been capable of inventing capitalism, they are ideally organised to adopt it with a vengeance (Hsiao, 1990). Vogel (1991), for example, claims that the Asian NIEs all share an 'industrial neo-Confucianism' that underlies their acceler- ated export-oriented manufacturing growth. The main features of this cultural commonality include meritocracy within the state elites, recruitment through educa- tion, strong vertical and group loyalty, and emphasis of personal improvement throughout life. Termed 'post-Confucian' by Moody (1988), the culture common to the Asian NIEs is seen as a code of ethics to guide behaviour that is institutionalised, in part, by a centralised bureaucracy which is essentially authoritarian in nature and is allowed to formulate policy goals independently of particular groups.

The use of culture to heighten state autonomy was accomplished through ethnic and racial divisions as well. Koreans, and to a lesser extent the peoples of Taiwan, were exhorted to follow the state's directives to industrialise as a means of counter- ing the neocolonial intentions of their nearby former colonial master, Japan. On Taiwan, the Kuomintang (KMT) consisted of Chinese people escaping from the mainland and, as such, could command solidarity among its elites against the more numerous politically disenfranchised indigenous people. The Singapore state also likely benefited from its mission to create a Chinese state in Southeast Asia, a cause which became more politicised after the anti-Chinese riots in Malaysia in 1969. When combined with other powerful ideologies, such as anticommunism and state- of-war mentalities, these cultural factors suggest a singular capacity for holders of state power to exercise a high degree of autonomy from other social forces.

The degree of similarity in each of the above sources of state autonomy should not be taken too far. Both Korea and Taiwan had a much more advanced industrial base than Singapore, but, unlike either Singapore or Hong Kong, they could not use national or territorial borders to stem massive rural-urban migration during the course of rapid industrialisation. The homogeneity of the Korean population is unmatched by the other three, which have minorities and/or marginalised indigenous peoples. Nor is neo-Confucianism as uniform as some authors imply.(6) Contrasting geopolitical positions are also occupied by each. Among the four, Singapore was the only officially recognised nation-state for most of the period of accelerated industrialisation. The colonial status of Hong Kong is unique among the Asian NIEs and among newly industrialising countries (NICs) in general. Nevertheless, the commonalities noted above did result in an extraordinary concentration of power and state autonomy in the Asian NIEs that only began to be effectively challenged in the late 1980s.

(5) Much of the statistical data gathered by the state on such matters as income distribution, poverty, and other social conditions has been directed toward justifying the benefits of 'authoritarian capitalist' development. In each case there is an obvious absence of non-state- controlled sources of information on these issues (Douglass, 1992a). (6>As partially evidenced by-the tremendous growth of Christianity in Korea over the last several decades, Morishima (1982) also details how the Confucian concept of loyalty varies greatly among Japan, Korea, and China.

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The crucial corollary to the recognition of the unusual degree of autonomy afforded the state is that it was effectively used to help solve a problem common to all would-be late-industrialising' economies: how to create international competi- tiveness through industrial expansion by raising labour productivity while maintaining attractively low labour costs (Amsden, 1990).(7) Woo (1991) adds another dimen- sion to this point by arguing that the state was compelled to play a greater interven- tionist role in the development process in East Asia than in Western capitalist economies because the suppression of entrepreneurial activities during colonial times had resulted in the lack of development of a capitalist class needed to advance economic growth. From these two perspectives, namely the absence of an entre- preneurial class and the imperative rapidly to become internationally competitive in manufactured exports, the 'developmental state' was called upon to accomplish a number of specific tasks: ensure reinvestment to expand productive capacities by enterprises (which involved limiting 'crony-capitalism'); keep wage increases below increases in labour productivity through direct and/or indirect control of labour; and ensure the reproduction of labour as well as efficient working of industry through substantial investments in the built environment, namely, in housing and collective consumption as well as in industry-related infrastructure. In accomplishing all of these, the state was also called upon to minimise potential legitimation crises.

When these features are considered, the Asian NIE model of the developmental state begins to unravel. As elaborated below, the states of each interacted with internal and external forces in decidedly different ways to create divergent paths of industrialisation. When these differences are explored, the question arises as to whether the excesses of state power and its suppression of civil society was an essential or gratuitous feature of the developmental state. Given the complexities of historical analysis involved, there may be no unequivocal answer to such a question, but, by looking at the variations in the relations between the state, capital, and labour, one has room to postulate that much of the authoritarianism was unneces- sary and perhaps dysfunctional.

2.2 State and capital That strong state control and capitalist development went hand in hand in the four Asian NIEs is by now self-evident. The evidence is also clear that the state was not merely an assemblage of rent-seeking parasites on the redoubtable industrial entre- preneur, as postulated by mainstream neoclassical economists. State interventions were incisively used to create the foundations for and sustain export-oriented industrial expansion and economic growth. But the avenues chosen diverge substan- tially among the four NIEs.

In Korea, state-capital relations led to the emergence of the chaebol, huge family-based oligopolies that resemble more the pre-World-War-2 Japanese zaibatsu than firms in the other Asian NIEs.(8) In this case, the relation between capital and labour most approximates that of a type of corporatism (Pahl, 1977; Winkler, 1975): the setting up of state-protected areas of technical expertise that have some

(7) Although there has been scope for 'bloody Taylorist' solutions (the extensive expansion of production through extending the work weeks and expanding the supplies of wage labourers without significant increases in labour productivity), this began to reach limits by the 1970s as labour shortages appeared. Nevertheless, it continues to be a marked part of 'women's work' and child employment in textile and garment industries and in home-based piecework (Douglass, 1991; 1992a). (8) The chaebol are dominated by Sansung, Hyundai, Daewoo, and the Lucky-Goldstar Group. The major difference from the Japanese zaibatsu has been the absence of internal banks in the chaebol, which forced them to rely on access to the government-controlled banking system.

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degree of autonomy from other elites and that use their power to manage emerging oligopolies and, more general, the economy.<9) A major feature of this relation was the creation of a 'technobureaucratic elite' (Davis and Ward, 1990) that was protected both from the military elites dominating the political regimes in power and from the chaebol. As with the other Asian NIEs, the technobureaucracy was expanded through the establishment of policy think tanks and economic planning units in the government, by bringing universities and academics into national plan- ning projects, and by recruiting those receiving technical training abroad into the state planning apparatus.

In this regard, the assertion that the Asian NIEs were somehow immune from corruption (Yoshihara, 1988) does not bear close scrutiny. Rather, the point is that state autonomy exercised through a sheltered and expanding planning bureaucracy allowed rent-seeking to be linked to economic management and leverage over capital for national development purposes. In Korea, control of the chaebol was substan- tially accomplished through nationalisation of the banking system, giving the state command over access to credit and allowing it to both discipline and financially subsidise the growth of the chaebol. The state, in addition, heavily regulated foreign investment and trade, controlled access to raw materials, selectively provided infra- structure to industries and strategic regions, and directly put down labour movements while investing in education and skill development (Park S O, 1993).(10)

The Singapore state also embarked on a course of linking its prospects to those of large corporations, but, in its case, the linkages were, unlike those in Korea, almost exclusively with transnational corporations (TNCs) headquartered in OECD countries. The reason often given for the Singaporean strategy of 'extroverted corporatism' is that its political leaders concluded that to push the island's dominant merchant capital into manufacturing would be too slow and difficult (Fong, 1990; Ho, 1993). Singapore's break from Malaysia in 1965 also brought a sudden loss of a larger domestic market, which compelled the state to pursue a strategy to attract direct foreign investment (DFI) to serve the already existing markets of North America and Europe:

"A crucial turning point in the developmental process for Singapore took place in 1965 with the separation from Malaysia. Without any further prospect for free entry into the Malaysian market and with the still rising unemployment rate, the PAP [People's Action Party] state decided to shift immediately to export- oriented industrialization. Given the compressed time frame, especially under the sense of crisis in 1965, and given the infant stage of local entrepreneurs, the government embraced almost every foreign investor that could create job oppor- tunities and produce goods for export" (Huang, 1989, page 100)

<9) Winkler (1975, page 109) defines corporatism as "an economic system of private ownership and state control". Saunders (1986, page 130) elaborates further that, in place of the prin- ciples of free enterprise, the corporatist state imposes four principles of its own: (1) unity, based on collaboration and cooperation between capital and labour; (2) order, based on stability and discipline among economic actors; (3) nationalism, pursued internally and vis-a- vis international competition in the name of the national interest; and (4) success, based on the principle that ends justify the means. As summarised by Saunders (page 131), the corporatist state is characteristically "centralized, hierarchical and co-optive". (10>Woo (1991) argues that the autonomy of the state in carrying out these activities was directly derived from Korea's geopolitical position in the Cold War, which gave it extra- ordinary levels of US assistance and allowed the government to overcome any domestic opposition to its interventions.

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Thus, although DFI has played a relatively modest role in Korea, it became the economic mainstay of Singapore. Singapore's strategic geographical position in the world economy also favoured its attraction of foreign investors. As the hub of Southeast Asia and in a region of rich oil reserves, it captured much of trans- national oil-refining investment and was perceived as being more politically stable than any other Asian NIE as an offshore location for labour-intensive segments of production moved by transnational corporations from the USA and Europe. Singapore had also inherited a favourable financial and service sector to support its attempt to bring foreign investment into its economy. This strategy of attracting transnational capital began to work by the mid-1960s as textiles shifted from Hong Kong, the petroleum refining industry began to develop, and other TNCs began to bring investments in pharmaceuticals.

Taiwan and Hong Kong took divergent paths from those of Korea and Singapore, in that state autonomy was used to foster industrialisation based on small and medium-sized firms. Johnson (1988, page 161), in acknowledging that large- scale firms (for example, the Tatung Group) are also important in Taiwan, neverthe- less claims that there is "some evidence that the culture of business in China resists conglomerate integration more than either Japan or Korea". However, the similarities between Taiwan and Hong Kong largely end at this point. For, although Taiwan began to take on the attributes of an entrepreneurial state through the setting up of state-owned enterprises in key sectors, the colonial government of Hong Kong largely avoided both direct control over enterprises and state competition with the private sector (Davis and Ward, 1990). The government of Taiwan created its own state-run Chinese Petroleum Corporation and monopolised the petroleum industry by severely limiting foreign companies from investing in this sector in the island. The KMT party itself owns and manages numerous enterprises, and through these enterprises also remains independent of big business for its own financing (Cotton, 1992).<n) In 1976, public enterprises in Taiwan accounted for more than 20% of the island's GDP.<12>

The Hong Kong government focused instead on using investments in the built environment, particularly public housing, and pricing policies to foster economic growth, while letting Hong Kong's small-scale enterprise compete internationally without the type of selective industrial policy of Korea or Taiwan. Wade (1993) argues that the ability to guide the Hong Kong economy without resorting to the 'big push' orchestrated in Korea and Taiwan, and to a lesser extent in Singapore, was a product of Hong Kong's level of development in the 1950s, namely the presence of a relatively skilled labour force, a long history of entrepreneurship among small- scale producers, and the continuity in its colonial public administration.

The milder form of state intervention in Hong Kong has been alternatively termed 'positive noninterventionism' (Haddon-Cave, 1984) and 'accommodationist' (Kim W-B, 1993). Lui and Chiu (1993) adopt the former term to counter the widely circulated work of Friedman and Friedman (1980) who argue that the state has been a passive actor in Hong Kong's economic success. Massive provision of public housing from the 1950s onwards has, for example, been crucial to the success of local industries by stabilising the supplies of labour and the reproduction of labour power on a low-wage basis that has kept the economy internationally competitive.

<n) Korean governments remained more vulnerable to nonstate interests through political elections requiring vast sums of money to engineer, but they also developed sources of income that were independent of chaebol through the Korean Central Intelligence Agency, overseas military involvement (Vietnam), and through a high reliance on foreign loans (Cotton, 1992). <12) In contrast, the share in Korea at the same time was 9% (Johnson, 1988, page 150).

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But Lui and Chiu (1993, page 69) also conclude that, "compared with other NIEs in East Asia, the role of the Hong Kong government falls far short of being that of a capitalist developmental state. Not only has it not formulated any strategic industrial policy but also it deliberately refuses to provide any long-term national rationality of industrial development or direction for the operation of the market economy". The state's involvement in the economy is viewed as always being indirect rather than direct. That is, it is focused on institutional support through, for example, the Hong Kong Productivity Council and the Trade Development Council, and through infrastructure development, including the building of industrial estates and advanced university-based science and technology facilities. It has not created substantial programmes to subsidise particular sectors or firms, and manufacturers are essentially left to tackle problems on their own.

The outcome of the Hong Kong path of export-oriented industrialisation has been the perpetuation of labour-intensive manufacturing in the colony. This has been partially made possible by the periodic opening up of Hong Kong to labour from China, which was of particular importance in the late 1970s. Hong Kong firms in such key areas as garment making have also been able to ameliorate the impact of rising labour costs through innovative ways of increasing the reliability and quick turn-around time for international orders. Keeping labour-intensive production alive has also proved to be the limitation of the Hong Kong model. Although industrial expansion performed as well as that of the other NIEs up to the 1980s, without the type of support and interventions by the state in the other Asian NIEs, Hong Kong has subsequently been less able to move out of light industries.

In sum, the combination of historical conditions, including preexisting industrial organisation, and external requirements yielded quite different strategies toward indigenous capital and the drive toward export-oriented industrialisation. Whereas Korea more closely followed a corporatist alignment of state and large-scale indigenously generated oligopolies and Singapore attached its fortunes almost exclusively to transnational capital, Taiwan moved more toward the entrepreneurial state, and Hong Kong took on the characteristics of positive noninterventionism cum accommodation. Just as they worked to create different internal alignments and industrial structures, state strategies were also characteristically different with regard to the international economy and foreign investment.

2.3 The Asian NIE state, core states, and transnational capital Few topics have generated as much discussion on the Third World state as the presence of transnational capital in developing countries. Much of the literature on these topics—including mainstream product-cycle models of oligopolistic competi- tion, world systems, and neo-Marxist dependency arguments—suffers, however, from the focus on TNCs rather than on the host state, which, when referring to Asia, Africa, and Latin America, is generally assumed to be part of an undifferentiated world of 'peripheral capitalist' economies dominated by core actors—capital and neo-imperialist states alike. As summarised by Jenkins (1987, page 168):

"On this view international capital not only controls and manipulates the depen- dent state in the Third World, but it also structures the form of the state. Thus the emergence of authoritarian regimes in Latin America and other parts of the Third World since the mid-1960s is explained in terms of the 'needs' of inter- national capital. Indeed some of the military rulers of these countries are iden- tified as 'the political party of the multinational corporation'". Such assertions have been criticised for undertheorising the state. In one

counterview it is argued that, because TNCs must compete internationally, the

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state—Third World states included—has at least some degree of independence from individual capital or fractions of capital. This view is not dissimilar to previously noted arguments applied to internal relations, and they, in fact, lead to the same conclusion: the state can call upon at least some relative autonomy from inter- national capital. Haggard (1986), in his comparative analyses of Asia and Latin America, goes even further to assert that the strategies of particular states deter- mine the nature of a particular economy's linkage with the international economy, and not the reverse. This position should not be taken too far; for there can be no doubt that international firms, core nation governments, and international lending agencies have, in fact, heavily influenced state policy formulation. 'Banana republics' do exist; the World Bank and the International Monetary Fund (IMF), as seen in widely adopted 'structural adjustment' policies, have substantial influence on states as well (Stewart, 1991; Van der Hoeven, 1991).

Nevertheless, as capital is not monolithic and as capital and national interests do not necessarily coincide, relative autonomy can be parlayed into creating room for maneuver by states on the capitalist periphery. All of the governments of the Asian NIEs have sought linkages with transnational capital in various proportions and ways, in part because of two severe constraints they share, namely, an extremely limited resource base and a relatively limited domestic market. But they have each done so in decidedly different ways and for a different mix of political as well as economic purposes. In the cases of Korea and Taiwan, for example, the security and military interests of core capitalist countries, which worked to shore up these bastions of anticommunism on the Western Pacific Rim, were handily used by their governments not only to dampen internal social and political reform but also to resist such economic reforms as opening up their economies to imports from the industrialised countries (Wade, 1993).(13)

In Taiwan, the KMT, which has been much more reliant on DFI than has Korea, has at the same time been more selective than, for example, Singapore in allowing DFI into its economy and has been adroit at using the screening process to strengthen its control of Taiwan by directing DFI towards activities that complement rather than compete with domestic capital.(14) It has also required some foreign firms to export a minimum percentage of their production as a mechanism to limit competition between local and foreign firms for domestic markets. These and other regulations in Taiwan, such as the requirement that firms obtain approval for the import of capital goods and inputs, do not exist in Singapore, for example.

Singapore has been able to use its more stable geopolitical position in Southeast Asia to attract investments that might otherwise have gone to Taiwan. And, although DFI came to Singapore and Taiwan at virtually the same time, investors played different roles in terms of capital formation, ownership patterns, output value, employment, and exports. In terms of capital formation, for example, although Taiwan used DFI to substitute for the withdrawal of US military aid, it still amounted to less than 5% of gross domestic capital formation (GDCF) at its peak in 1970 (Huang, 1989). For Singapore it accounted for 30% of GDCF in the early 1980s. With regard to enterprise asset ownership, less than 3 3 % of Taiwan's manu- facturing firms have been wholly owned by foreign investors at any one time; in Singapore the percentages reach 50%. More strikingly, firms with DFI have

(13)In the 1970s and 1980s, Taiwan was, in turn, able to use trade tariffs to increase state revenue and expand its technological and supply capacity (Wade, 1993). <14)This has partially been accomplished by, for example, requiring foreign investors to enter into joint ventures or to purchase local inputs.

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generated less than 20% of the manufacturing employment in Taiwan, but almost 75% in Singapore. Similar ratios hold for the value of output in the manufacturing sectors as well as the share of DFI firms in manufacturing exports.(15)

From these and other examples that could be drawn upon to show key differ- ences among the Asian NIEs with regard to linkages with transnational capital and internal policy choices, the weakness of world systems and dependency theories that do not allow for variations in export-oriented strategies becomes apparent. In terms of the predictions of dependency theory, for example, Singapore is the only Asian NIE that has experienced the predicted declining share of involvement of domestic firms in manufacturing exports under the penetration of DFI. And, even in this case, it cannot be convincingly argued that TNCs somehow directly forced the Singapore state to follow such a strategy. More accurately, the state put forth an almost single-minded strategy to try to use DFI as a substitute for what it perceived at the time to be an unpromising domestic industrial sector.

Thus, although in Singapore, as in all Asian NIEs, state policies necessarily had to respond to and accommodate the interests of TNCs—as well as the dynamics of the international economy—the strategic choice taken was, as the other Asian NIEs show, one of many possibilities. Whether or not other choices would have worked better or worse than the one taken is not the question at hand; rather, it is whether or not the room for maneuver was so constrained by international forces that would-be NIEs were compelled to comply with a single model of linkages with transnational capital. The evidence of the past three decades is that no such uniform model was attempted or applied.

2.4 State and labour Just as the Asian NIE states found alternative means to address and bargain over the requirements of capital, they also displayed variations in state-labour relations. Contrary to the conclusions of the neoclassical economic analysis put forth by Galenson (1992), the Asian NIEs have not simply followed the development paths of the advanced countries of the world in terms of either economic growth or labour-market changes. The weakness of such analyses lies in the simplification of 'labour' as a factor of production that can be understood from sectoral or occupa- tional decompositions and accounting methods rather than as a human factor intrin- sically part of political - economic systems in which it represents a social as well as an economic force.

It is more useful to look at labour systems to show how differentiation and segmentation of labour is achieved through institutional means—often involving the state—rather than market forces alone. In the case of the Asian NIEs, the problem that confronted export-oriented industrial expansion was not simply one of moving cheap labour into the factory system. More importantly, it was one of maintaining very large supplies of unprotected low-wage labour while differentiating and captur- ing scarcer supplies of more skilled labour without causing wage spirals through open competition for that more skilled labour. This was accomplished by regulating labour rather than allowing a market-determined 'price' of labour to prevail.

With regard to the maintenance of low-wage labour reserves, the proletarianised segment of labour in all Asian NIEs has suffered from state intervention to depress workers' wages below market rates in order to make exports competitive on the

(15)In Taiwan DFI accounted for 19% of total output value of the manufacturing sector between 1975 and 1979. In Singapore it reached levels of 85% during the same period. In Taiwan 3 1 % of exported manufactured goods were associated with DFI; in Singapore the share was about 90%.

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international market (Amsden, 1990). But internal conditions and state strategies varied. Hong Kong and Singapore could turn the faucet of migration from its neigh- bouring country off and on as a means of countering rising wages, and both used public housing and welfare services to subsidise labour costs. Concerning Hong Kong, its proximity to a much lower wage alternative in China as well as the small scale of its enterprises dampened any propensity for worker militancy, and the type of state violence against labour movements that became routine in Korea did not manifest itself there. Lui and Chiu (1993) explain that traditional unions were undercut by the decline of shipbuilding after World War 2, and, with the prolifera- tion of small factories under paternalistic management centred on the family, class formation and worker consciousness remained weak. The ideological struggle between the People's Republic of China and KMT that was transposed to Hong Kong also displaced labour identity.(16)

In both Korea and Singapore, the government has been actively involved in the creation of a 'hyperproletarian' segment of the labour market that has been largely filled by women and is characterised by a high turnover of labour, institutionalised job insecurity, and low wages (Deyo, 1989). In Korea more than 70% of women employed in waged work are in the manufacturing sector where they receive less than half the pay of their male counterparts (Park K A, 1993, page 133).<17> The absence of either state or community restraint on exploitation of workers in Korea is manifested by extremely poor working conditions for this segment.(18) Labour laws have been arbitrarily enforced and favour employers over workers, particularly in the case of heavy industry and automobile production, the sectors in which labour has become most militant. Unions have never been allowed into political parties, and, in Japanese fashion, some of the largest are actually 'paper' unions set up by the companies themselves. W-B Kim (1993, page 35) provides the ironic conclusion that, through such means as outlawing strikes and closed shops in both Korea and Taiwan, "the labor market was kept free via direct state action".(19)

The Singapore government manipulated union activities through such means as direct wage controls and the opening of the island to migrant labour. The initially belligerent, communist-led unions were effectively incorporated into the state decisionmaking process, and by the 1960s labour had become "responsive to state policy", leaving members of the working class to respond individually to the "changing market situation" rather than through collective action (Ho, 1993, page 57). For its part, the KMT of Taiwan prohibited strikes and labour bargaining under martial law, with limited unionisation allowed under KMT supervision, which included overseeing the selection of union leaders. In all cases the net effect of indirect and direct state action was to provide continuous supplies of low-wage,

(16> Lui and Chiu (1993, page 68) conclude that unions are more appropriately welfare associa- tions rather than organisations for capital-labour-bargaining. Only 7% of Hong Kong's labour was unionised in 1981. The relative absence of organised labour and wage-related pressures allowed enterprises to concentrate more on managing production to keep labour- intensive production alive. (17) Korea also holds the distinction of being the only Asian country in which women work more hours than men. Wages for women have been increasing relative to men; but in 1989 they still received only 53% of wages for men (ParkK A, 1993): "Korea has dubious distinc- tion of being nation with widest gap in wage rates between men and women" (Kim W B, 1993, page 35). <18) Korea's "twisted form of Confucian paternalism" has one of the worst factory safety records in the world. In 1990, 2336 workers were killed and 132893 seriously injured in workplace accidents (FEER 1991, pages 64 - 65). <19) Only 1 1 % of the manufacturing labour force was unionised in early 1980s.

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vulnerable labour—most often female—that was not able to organise to make effective demands for higher benefits. Where the state provided those benefits, as in the case of housing in Hong Kong and Singapore, labour was made all the more dependent upon retaining its good will.

The capturing of more-skilled labour was accomplished through different means. Large-scale enterprises in Korea used what Jacobs (1985) terms 'patrimonialism'. As defined by Deyo (1989, page 14), such labour systems are characterised by "control based on networks of particularistic, discretionary, dyadic exchange of benefits for loyalty and compliance". In these firms, superiors at each level have substantial leeway in rewarding those under them with advancement and improved types and conditions of work to create both insecurity and dependency on the company through personalised dyadic relationships.(20) The highly spatially polarised pattern of industrialisation in Korea and the very scale of the chaebol separated labour from its rural social base and required much greater fine-tuning of labour differentiation within the firm than in either Taiwan or Hong Kong (Deyo, 1989, page 23).

The interplay between the industrial organisation created through state-capital relations and the modes of labour regulation has had further repercussions on social and political stability. In Korea the formation of the chaebol brought together large numbers of semiprotected male workers, inadvertently producing volatile conditions for labour militancy. The use of state police power to suppress directly the resulting strikes at shipyards and automobile factories served to create the highest levels of antistatist activity by labour among the four Asian NIEs.

In contrast, in Taiwan and Hong Kong the state depended upon more traditional communal paternalism in small and medium-sized locally-owned factories to segment labour through 'noneconomic claims'.(21) Deyo (1989, page 17), in observing, for example, that these firms were less likely than TNCs to release workers in recession, and that workers have a greater leverage over a variety of work-related and non- work-related relationships, concludes that:

"This leverage follows from the very fact that wage-labor is not the sole basis of control: that other social considerations are an essential part of an implicit labor contract under which mutual obligations are broadly and loosely defined. The arrival of relatives from another town, birth of a child, a funeral, need for over- time to meet unexpected family obligations—these and other household or personal exigencies provide valid claims on employers to reduce or modify work demands on employees ... Communal paternal and patriarchal labor systems derive in part from an absence of imported Western organizational forms and in part from a continuity of linkage to local community and familial organization encouraged by the dispersion of production to relatively small firms or rural towns." These arrangements have their own seniority system that serves to tie the

employee to the firm through nonwage rewards, which effectively inhibit both worker organisation across firms and interfirm wage competition (Cheng, 1990). In addition, whereas Korea's industrialisation involved corporatist alliances between

(20)Deyo (1989, page 17) goes on to state that these dependency bonds, "largely free from external political or community constraints, often result in harsh and arbitrary authority. Favoritism is common, and production is regulated less by rules than by direct, often abusive supervisory direction".

<21) In 1976, firms with more than 500 workers accounted for 45% of the total in manufacturing in Korea, whereas in Taiwan the share was 26% (Levy, 1991).

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the military cum political leaders and large-scale enterprises, Taiwan was marked by much looser coalitions of technocrats, fragmented local capital, foreign investors, labour, and farmers (Gereffi, 1990, page 25). Even more than Taiwan, the colonial government of Hong Kong placed high reliance on small firms and their ability to call upon traditional social relations and kinship authority to enhance their discipline of labour and thereby reduce the need for state intervention in labour affairs. In addition to low-cost housing and services, the government focused on controlling the prices of basic foodstuffs (rice and vegetables) by establishing state- organised cartels. Thus, although each state confronted similar problems to main- tain labour conditions and create internal divisions of labour appropriate for international competition, the constellation of means employed to solve these problems varied among them.

3 Asian NIEs as models of the developmental state So far, I have agreed with the major thesis that each of the Asian NIE states enjoyed an unusually high degree of autonomy from internal social forces and that this autonomy was instrumental in creating conditions for export-oriented manu- facturing to lead economic growth. The sources of autonomy were not, however, solely generated by the regimes in power, but emerged more generally from the specific historical experiences of each. Moreover, in the course of industrialisation the interplay between specific state-capital and state-labour relations began to generate social transformations that further differentiated the economic, social, and political pathways of development of each. In this sense, they provide models of development only to the extent that they reveal different ways of addressing the economic requirements for 'late industrialising' under strong state intervention. They do not, either individually or collectively, provide the model of the develop- mental state, for at least three reasons: ( l ) t h e historical context surrounding their particular experiences has significantly changed and cannot be reconstructed in these economies or elsewhere; (2) there is no 'theory' to allow a clear differentiation between those state actions that were necessary for economic growth and those that were simply opportunistic and served the 'political' expediency of regimes in power; and (3) the term 'developmental' is itself subject to further debate and interpretation.

Concerning the changing historical context for export-oriented industrialisation, contemporary history has not been kind to most of the existing and would-be NICs of the world. The Latin American NICs—burdened by heavy debts and structural adjustments imposed upon them, are experiencing slow industrial growth accompa- nied by drops in real incomes and increasing magnitudes of extreme poverty. And of the fifteen or so countries identified in the late 1970s as the 'next' NICs, only the three Southeast Asian countries of Indonesia, Malaysia, and Thailand are currently performing well (Athukorala, 1989). On a world scale, the gap between rich and poor countries continues to increase, and much of the middle is hollowing out as a very limited number of countries move upward and many more continue to stagnate or experience declining per capita incomes (Douglass, 1992b).

Such observations move debates in several directions. One looks toward the international scale to consider the proposition that global conditions have changed too profoundly to allow Asian NIE-like formulas to be successful. Support for this position is not difficult to find. The tremendous and expected long-term slowdown in the world economy, the potential opening of cheap-labour economies in Eastern Europe, technological change allowing for a reconcentration of formerly labour- intensive activities in North America, Europe, and Japan, and the portent of increasing protectionism in these same economies portray substantially different

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conditions facing countries wishing to accelerate industrialisation via manufactured exports as the high road to development in the 1990s.(22)

The counterposition must also be entertained. For specific economies that are able to construct the conditions needed to attract foreign investment or generate a domestic basis for export-oriented manufacturing, the very dearth of new candidates may provide opportunities for them to succeed. But in either case, it must be recog- nised that the world economy is not as hospitable to NICs as it was in the 1960s and 1970s. This conclusion points toward another, namely, that the internal condi- tions for generating such a strategy have become all the more critical. Among the key internal factors that have been associated with the state in the Asian NIEs are: political stability and a high degree of state autonomy to carry out interventions to leverage capital, to minimise nonproductive uses of resources, and to ensure sufficient supplies of labour at various wage and skill levels. In meeting these demands, such a state would also be required to sustain these conditions over time, and this would include timely investments in infrastructure, education, and other services as well.

There are an equal number of debates concerning the probability of an NIC being able to construct these internal conditions. International political forces, operating through such institutions as the World Bank, IMF, and USAID, have made access to donor credit and financing—which were crucial to Korea's development—contingent upon a reduction in the role of the state in all spheres of the economy. At the same time, capital has also become so internationalised that the tools formerly used by the Asian NIEs, such as nationalisation of banks, do not offer the same degree of leverage as they did in the 1960s, even over domestic firms. And, although police force and other intrusive means may still be called upon to regulate labour, democratic movements have gained momentum worldwide, and international networking among nongovernmental organisations has created avenues of solidarity across national boundaries to resist at least the worst abuses of state power with regard to labour and the urban poor.

As the Asian NIEs encounter their own imperatives for structural change in their economies, they are also confronting many of the dilemmas stemming from changes in the political economy internationally and internally. Although these are more difficult to generalise about than much of the prevailing literature suggests, the imperatives for structural change are by now well understood. The regulation of labour to keep wages competitively low has run its course as labour shortages have become chronic.(23) Former 'domestic' enterprises have found their own solutions by moving the labour-intensive segments of production to the nearby low-wage economies of China, Thailand, Malaysia, Indonesia, and, to a lesser extent, the

(22) E v e n for t h e A s i a n N I E s , e x p o r t - o r i e n t e d growth has b e c o m e p r o b l e m a t i c b e c a u s e of slow e c o n o m i c growth w o r l d w i d e . K o r e a n e x p o r t s , which r e a c h e d a n equivalent of t w o fifths of t h e entire e c o n o m y in t h e late 1 9 8 0 s (Douglass, 1 9 9 3 ) w e r e flagging by late 1 9 9 2 . K o r e a n c a r m a k e r s (Hyundai G r o u p , D a e w o o G r o u p , and Kia M o t o r s ) w e r e p r o d u c i n g at only 6 0 % capacity, and stockpiles of vehicles b e g a n to overflow t h e factory a n d sit at t h e d o c k s . (23) In Korea the Ministry of Labor declared that rising wages were hurting Korea's competi- tiveness, and placed a 5% ceiling on wage increases. The government attempted to press the largest companies to comply by threatening tax investigations and an end to subsidised loans, but wages increased by 1 0 % - 1 5 % during 1992 {FEER 1992e). At the same time, Korea already has more than 100000 foreign workers; yet the Korean Federation of Small Businesses claims that the manufacturing sector has a shortage of 360000 workers, a number approximating almost 10% of the nation's work force. As many as half the garment factories in Seoul are now said to depend on Filipino workers (FEER 1992b).

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Philippines, with Vietnam 'waiting in the wings'.(24) In other words, continued competition in established export sectors in the Asian NIEs has a very limited horizon (Kim W-B, 1993).<25>

In facing this and other commonly shared problems related to shifts in compara- tive advantage, each of the Asian NIEs is at its own crossroads, facing significant changes in the state and state policy in the 1990s. At the extreme is Hong Kong's return to China in a context in which its export-oriented manufacturing, based on adroit adjustments without transformations in its small-scale labour-intensive indus- trial structure, has also reached an apparent impasse.

In another direction, the government of Singapore invented the 'growth triangle' to shore up its eroding low-wage comparative advantage (Ho, 1993). By early 1993, however, this strategy to combine Singapore, Johor, and Riau into a 'mini' inter- national division of labour seemed to be coming apart as Malaysia and Indonesia began baulking at their secondary status (FEER, 1993a). The state is also having to cope with protest from indigenous entrepreneurs against favouritism shown toward foreign investors (Bello and Rosenfeld, 1990).

The government of Taiwan, like those of the other Asian NIEs, is actively involved in trying to steer a new course as well (Tsay, 1993). It is adopting a massive public works programme to make Taipei a principal transportation hub of Asia, and the Ministry of Economic Affairs is advocating that it become a regional operations centre for multinational corporations by providing research and develop- ment (R&D), manufacturing, marketing, and component procurement with headquarter functions. Ten 'emerging industries' have been targeted for special support,(26) and a US$303 billion six-year National Development Plan has been adopted to raise the quality of life and prepare for a n e w stage of economic development.(27)

(24)The transnationalisation process also continues. Cumulative DFI by Korean companies doubled between 1990 and 1992 to reach US$4.1 billion (FEER 1992a). The chaebol are integrating with TNCs from OECD countries. The carmaker, Daewoo, after a disappointing linkup with General Motors, announced in late 1992 a tie-up with Honda Motors that would make it the first Korean carmaker to gain access to the Japanese luxury market (Legend). Honda, in turn, will gain direct access to the Korean market. To make matters more complex, Samsung, which is now the eighteenth largest conglomerate in the worlds, may purchase Daewoo (FEER 1992c). Taiwanese corporations are even further ahead of the Korean chaebol in the transnationalisation process. Pushed by a 40% increase in the value of Taiwan currency against the US dollar, between 1987 and 1993 more than 4000 Taiwan corporations invested a total of US$12 billion in Southeast Asia alone. Another 7000 Taiwan-based companies have set up operations in China with a total investment of US $6 billion (FEER 1993c). The KMT is also pushing forward one of Asia's most ambitious privatisation programmes. In 1993 it attempted to sell US$20 billion worth of public works and state- owned enterprises, including petrochemical, insurance, machine manufacturing, banks, and shipbuilding (FEER 1993b). But at the same time, the government-backed Taiwan Aerospace bought 50% of British Aerospace's regional aviation division to produce aircraft in Taiwan.

<25) During the period 1 9 8 7 - 9 2 40% of Korea's garment and textile firms, mostly small and medium-sized, went under as local wages in the industry climbed by 280% during same period (FEER 1992a). <26) Information, consumer electronics, precision machinery and automation, specialty chemicals and pharmaceuticals, advanced materials, semiconductors, telecommunications, aerospace, pollution-control equipment, and medical and health-care equipment. (27) Welfare improvements include expansion of medical facilities in preparation for the 1994 introduction of a universal national health insurance programme; 300000 units of affordable housing; and environmental improvements (air-pollution control, river cleanup, sewage-system construction, and solid waste treatment). The government also intends to promote a more balanced regional development by, in part, raising the standard of public facilities in the smaller towns to a level closer to that of the cities.

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The Korean government has also moved to try to shift the centre of industrial gravity of the lumbering chaebol away from Tordist' production systems toward high-technology-based sectors and flexible forms of industrial organisation.<M) In April 1992 it unveiled the 'G7 project' (named to promote Korea's membership in the G7 group of countries), which targeted ten major research areas for industrial growth.™ The government is to invest US$50 billion in the programme over the next eight years, with 80% of the funds to come from private industry. In 1991 it spent US$4.5 billion on R&D—the highest amount in the developing world.(30) The Korean Institute of Economics and Technology is also pushing for a US$33 billion investment in microelectronics, aeronautics, new materials, and biotechnology in the 1 9 9 0 - 9 4 period.

The Asian NIE states continue to try to steer their respective economies, but political reforms that are underway are raising doubts about their capacity to enjoy the degree of autonomy that they did in the past. Many of the reforms are so dramatic that they would not have been predicted even a decade ago. Among the most striking was the election in Korea of a head of state not drawn from the military. Although the degree to which Korea's new president will be able to carry out the fundamental reforms promised is as yet unknown, the election itself is a watershed in modern Korean history and suggests a greater distancing of the state from the chaebol but, at the same time, diminishing autonomy of the state from civil society.(31)

The widening political participation through a multiparty system in Taiwan represents an equally profound development that has already resulted in a decline in the hegemony of the KMT. A Taiwan independence movement has gained popu- larity, and the number of opposition party candidates is increasing in the national legislature, threatening one of the major political bases of KMT power, namely, kickbacks to and from local enterprise associations that were favoured by govern- ment subsidies. Even the colonial government of Hong Kong has belatedly seen fit to push forward an agenda of democratisation.(32) Singapore appears to be the only

(28)It has in the past attempted to curtail the expansion of the chaebol. In the 1980s it identified 200 products that were to be reserved for domestic small and medium-sized enter- prises (SMEs) (fewer than 300 employees) and set up mechanisms for the cheap financing of SMEs but economic slowdown in the 1990s undermined these policies. In 1992 approxi- mately 7000 SMEs went bankrupt compared with 3400 a year earlier (FEER 1992d). Many of the survivors are subcontractors of the chaebol. <29) The electric car, advanced waste treatment (bioengineering), multimedia computers, high- definition television monitors, a light-water nuclear reactor, computer integration and intel- ligent manufacturing, materials (alloys and polymers), medicine (genetically engineered DNA, herbally based biotechnology, genetically engineered drugs), and advanced telecommunica- tions (FEER 1993d). (30> Backed by government subsidies and R&D expenditures, Korea's four largest chaebol (Daewoo, Hyundai, Lucky-Goldstar, and Samsung) have all entered into semiconductor pro- duction and high-technology computer electronics and now account for half of Korea's production of electronic goods (Douglass, 1993). Their strategies have included buying into California's Silicon Valley to gain access to the latest technologies. (3i) By April 1993 President Kim had to back down from his attempt to introduce a 'real owner's name' system to counter the use of fictitious names to avoid tax paying. Economists predicted that it would have led to an immediate withdrawal of 4% of the money supply from circulation. (32)This move has revealed the tensions between various classes and fractions of capital in Hong Kong. Whereas the coalition of centrist parties calls for more democracy without antagonising China, the conservative Liberal Party opposes Governor Patten's democracy plans, and the United Democrats of Hong Kong fully supports them (FEER 1993e). At the same time, the colonial government has announced a 'populist budget' stressing social problems that are to be addressed by the government rather than the market.

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state that is not experiencing broad-based social movements for demoralisation and political reform away from one-party rule. How long Singapore can remain aloof from the movements to expand the political community of the nation-state is not clear, but global and domestic changes indicate that a central problem for the Asian NIE state in the 1990s will be how to redefine methods of maintaining legitimacy other than through exhortations against communism and a suppression of labour and civil society.

If there is a commonality "among the Asian NIEs at the current juncture in history it is that the state in each is facing extraordinary pressures emanating from social as well as economic forces of change. Although often portrayed as simply an economic problem necessitated by rising labour costs and the appearance of new competitors in Southeast Asia, the crisis facing the Asian NIEs is equally one of the ebbing capacity of the state to use the tools of the past—martial law, police force against antiregime movements and labour, curtailment of freedom to associate and of speech—to maintain its autonomy from civil society. In the coming years, economic restructuring will undoubtedly also be paralleled by the search for new political alignments.

4 Conclusions: toward a 'post'-developmental state? The experiences of the Asian NIEs have in at least four ways contributed to renewed thinking about the role of the state in economic development. First, they counter the neoconservative view that government interventions which, inter alia, distort the market are inimical to economic growth. Second, they show how extraordinary degrees of state autonomy did not succumb to the nondevelopmental habits of the usual suspects in 'ersatz capitalism'—rent-seekers, comprador capital- ists, and other nonentrepreneurial elements (Johnson, 1988; Yoshihara, 1988). Third, they reveal that, in fact, there was no single 'developmental state', but were instead four distinct modes of state linkages and relations with capital and labour in the process of economic growth. Last, they raise further questions about the relationship between the state, the economics of late industrialisation, and civil society. Specifically, they call for an exploration in the relationship between the autonomy used to steer economic development and the authoritarian use of state power to suppress civil society. The first three points have been addressed in the foregoing discussion. The last is the topic of this concluding section.

Although the evidence shows that there has been no single developmental state among the Asian NIEs, the 'new' view asserts that only a strongly interventionist state can steer a course through the socially and politically arduous processes of late industrialisation in a highly competitive world economy. Huang (1989), for example, argues that "this relative autonomy of the state to its civil society makes possible the relatively smooth shift of development policy from import-substitution to export- oriented industrialization promotion without much resistance from groups of vested interests".(33) Others (Cumings, 1989) draw similar conclusions, and, superficially, these conclusions are easily supported: state interventions in each of the Asian NIEs were crucial factors in their economic success, and each NIE has also an unusually high degree of autonomy from internal social forces.

But a deeper examination of these relations proves much less than the surface might suggest. A starting point for such an inquiry is to question the term 'develop- mental state'. One of the least disguised features of this term is its subordination of

<33) He also notes that Taiwan, in relying on the philosphy of Sun Yat-sen to justify one-party rule to face the threat of communism, did not even go through the usual motions of claiming to be a representative government.

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all values associated with 'development' to a single privileged concern: economic growth. Once this economistic interpretation of human progress is revealed for what it is, it is also easily seen that these states were not, in fact, unequivocally developmental. To all but the most removed historian, much of what occurred over the decades—state use of violence against citizens, the smothering of political association and dissent, the sanctioning of cruel working conditions for much of the new urban proletariat, particularly for women and children—would hopefully not be welcomed by most as a development model to be emulated.

These observations do not ignore the fact that a majority of the population experienced measurable increases in material conditions of living, health, and education, but denial of basic human rights and political freedoms has also been common, and at least some of the regimes have engaged in extreme brutality against its dissenting citizens. None can be said to have significantly developed forms of democratic governance, at least not until very recently. Many of the disempowered have been propelled into collective use of violence to gain voice in the political affairs, and others now numbering in the hundreds of thousands have simply chosen to 'exit' by migrating to other countries.

When added to the severe environmental deterioration that has accompanied industrialisation in the Asian NIEs, and to the reportedly increasing income disparities and persistence of poverty, it becomes clear that the 'ends justify the means' apology for authoritarian rule has left much to be desired (Douglass, 1992a). This raises one of the most important debates about these miracle economies: will authoritar- ianism necessarily accompany successes in the next generation of late-industrialising economies? At least two points can be made in defence of answering this question with a tentative, perhaps naively hopeful, no. First, the experiences of at least some of the NIEs show that authoritarian extremes followed rather than preceded industrialisation, suggesting that economic success may have been used to justify regime entrenchment, rather than the other way around. Second, calls for political reform are emerging ahead of industrialisation in other Asian countries, suggesting that the conditions for the type of authoritarianism associated with the Asian NIE experiences in past decades can no longer be assumed.

To elaborate on the first point, one must make a distinction between the concept of autonomy and authoritarianism as a requirement for 'late industrialisation'. In the case of the developmental state, Cotton (1992) defines state autonomy as the independence of the state from nondevelopment-oriented interference, which can be distinguished from authoritarianism, namely, a ubiquitous, penetrating, comprehen- sive, and highly articulated control over sociopolitical and economic relations. Applying this distinction to Korea, he argues that the initial high degree of state autonomy was the fortuitous outcome of a variety of historical factors that allowed it to pursue export-oriented industrialisation in the 1960s without the extremes of 'intensified authoritarianism' associated with the Yushin period under President Park in the 1970s.

In the 1970s, as Park's popularity precipitously declined, elections were dispensed with, the press was muzzled, nonstate organisations were more tightly controlled, and state powers were used to control labour movements directly (Han, 1987). In addition to increasing the penetration of the KCIA into the everyday lives of citizens, Park also expanded the role of the technocracy as a means of carrying out the programme of deepening the nation's industrial structure, thereby creating the Korean approximation of the Latin American BAIR—bureaucratic-authoritarian industrializing regime (Cumings, 1989). But the oppression this regime brought could not be sustained, and by the late 1980s, new contingencies, generated by the

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increasing prominence of the urban middle class, professionals, and some segments of labour, produced a constellation of forces that countered the authoritative uses of state autonomy.(34)

In sum, the invasive authoritarianism of the Park regime came after, not before or even during, the initial stages of Korea's export-oriented industrialisation and was not sustainable in the extreme forms that it took. What is not clear, however, is whether the transformation of state autonomy into increasing authoritarianism was required to sustain the industrialisation process (Cotton, 1992), or whether it was principally a manifestation of Park's specific political interests to sustain his own regime. In agreeing with the second view, a number of observers further argue that such authoritarianism was neither necessary nor functionally useful for Korea's economic growth (Bello and Rosenfeld, 1990; Cheng, 1990; Deyo, 1990). Huang's (1989) assessment of authoritarianism under the KMT in Taiwan leads to similar conclusions. In both cases, the experiences show that degrees of autonomy and extremes of authoritarianism do not necessarily coincide.

The idea that social relations are themselves transformed both by the choices taken by the state and by the process of economic growth leads to the second point about the linkage between industrialisation and authoritarian states. As previously argued, social changes and divisions generated through state-capital-labour relations in the Asian NIEs have themselves produced new and diverging contexts both for the continued exercise of state power and for the future industrial pathways available to each (Rosenau, 1988). These contexts do not array themselves along a linear line of human progress as often portrayed by those asserting, for example, that industrialisation inexporably leads to the rise of a politically powerful middle class that effectively transforms authoritarian regimes into democratic regimes. In fact, the strengths of democratic movements vary greatly among the NIEs, ranging from the intensive and entrenched struggles in Korea to the ambivalent constel- lations in Hong Kong (So, 1991) and the as yet subdued voices for political liberalisation in Singapore.<35) More generally, in the late 20th century, movements for inclusion in the political process are not so easily associated with levels of per capita GNP. In Asia countries that have yet to join the ranks of NIEs—Burma, China, Nepal, the Philippines, and Thailand—have in recent years experienced major popular uprisings against authoritarian regimes in the name of political liberalisation. Each has defied the dictum that Asian people do not want democrati- cally elected governments and that only in the later stages of the urban-industrial transition can such movements be expected to arise.

In other words, in the future, demand for political reform cannot be expected to follow export-oriented industrialisation with a substantial time lag. It is therefore not

<34> Chance is also given a role in this process. The personal decision of Kim Dae-jung to return to Korea in 1985 served as an important catalyst for the 'resurrection of civil society' (O'Donnell et al, 1986), and the hosting of the 1988 Olympics greatly empowered the opposi- tion forces because of the need to show the outside world a democratic nation without civil unrest (Cotton, 1992, page 528). Contrarily, the split in the opposition in 1987 held political reform back for several years. Cotton (1992, page 527) concludes with a hopeful but cautionary note that, although this may signal the "opening of the political system to pressures from interests formerly marginalized", it may not necessarily lead to a less authoritarian use of state power. <35>A-R Lee's (1993), in a study of changes in sociopolitial value orientations in Korea between generations throughout period after World War 2, found that traits of passivity and deferential behaviour associated with Korea's traditional authoritarian values were changing toward attitudes favouring open democratic regimes. As a result, political protest was becoming more widespread, especially among the young and educated.

The 'developmental state' and the NIEs of Asia 563

possible to assert that the state in the next generation of NIEs will have either the degree of autonomy or the degree of authoritarian uses of power associated with the experience of the four societies under discussion here. The search for other, more inclusionary, pathways of industrialisation is being placed on the political agenda— not by the states themselves, but by workers and middle-class citizens alike.

Looking at longer term state transformations, contemporary theorists of the Western state opine that its modern incarnation has three important characteristics that differentiate it from Western states of the past and from those in less-developed regions of the world, namely, its uses of power are depersonalised, standardised, and comprehensively integrated into the societal order of the nation (Poggi, 1990). To some this is the ideal state, one in which state, regime, and government are separated, and society is constitutionally governed through the rule of law (Lawson, 1993).

But, although these attributes may have granted the state an increased capacity to steer the nation through economic crises, the state has itself become increasingly opaque and, except in the form of orchestrated media events, distant from popular involvement. The nation-state as a sovereign, geographically demarcated territory is, at the same time, losing its coherence as international flows of capital and labour not only blur national boundaries but also create new international economic and cultural spaces within them. The result has been a crisis of a different type than that confronting the state on the Asian arc of the Pacific Rim, namely, a crisis of identity of citizens with the nation-state itself.

The strong state model of societal guidance that was a key feature of all of the Asian NEEs industrialisation processes is being challenged on all fronts, and whether a new complex of institutions reflecting an expanded political community that includes more democratic methods of regulation will either appear to be or be effective is one of the most important questions for the coming years. If Bello and Rosenfeld (1990) are accurate in claiming that the command economies of the Asian NIEs are obsolete and that legitimation crises can no longer be met with the stick but must instead be resolved through democratic practice,(36) the message from the West may not be comforting. But if there is a process of 'late democratisation' accompanying late industrialisation, a nonauthoritarian alternative to the develop- mental state based on the extension of political community beyond the state itself will also be on the political agenda.

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